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Child care subsidies

Evidence Rating

Scientifically Supported

Health Factors

Decision Makers

Child care subsidy programs provide financial assistance to working parents or, in some cases, parents attending school, to cover the costs of certified in-home or center-based child care. Child care subsidies are usually available to low income families; eligibility criteria vary by state.

Subsidy receipt may increase the likelihood that a single mother enrolls in school or job training (Herbst CM, Tekin E. Do child care subsidies influence single mothers’ decision to invest in human capital? Economics of Education Review. 2011;30(5):901-12.Link to original source (journal subscription may be required for access)Herbst 2011). Sliding scale subsidies, including subsidies requiring co-payments, may be nearly as effective as full subsidies in increasing employment of single mothers (Kimmel J. The effectiveness of child-care subsidies in encouraging the welfare-to-work transition of low-income single mothers. American Economic Review. 1995;85(2):271-5.Link to original source (journal subscription may be required for access)Kimmel 1995).

Child care subsidies can allow employed parents to access child care centers (Michalopolous 2010) and center-based preschool programs (Ertas 2012) that they may not have been able to afford without subsidies, and may increase use of center-based care (Johnson AD, Martin A, Brooks-Gunn J. Child-care subsidies and school readiness in kindergarten. Child Development. 2013;84(5):1806-1822.Link to original source (journal subscription may be required for access)Johnson 2013). More generous subsidies may increase the use of center-based care more than less generous subsidies (Weber RB, Grobe D, Davis EE. Does policy matter: The effect of increasing child care subsidy policy generosity on program outcomes. Children and Youth Services Review. 2014;44:135-144.Link to original source (journal subscription may be required for access)Weber 2014). Norway-based research indicates that subsidies that move children from informal, non-parental care to more formal care settings can have positive long-term effects on children’s future educational attainment and labor market participation (Havnes T, Mogstad M. No child left behind: Subsidized child care and children’s long-run outcomes. American Economic Journal. 2011;3(2):97-129.Link to original source (journal subscription may be required for access)Havnes 2011).

A recent report projects that expanding the child care subsidy to all eligible families below 150% of the poverty line would reduce child poverty by 3% (300,000 children). This change would nearly double the number of families receiving subsidies, and cost approximately $5.3 billion (CDF 2015).

Impact on Disparities

Likely to decrease disparities

Implementation Examples

The federal Child Care and Development Fund provides funding to states, territories, and tribes to help low income families, families receiving temporary public assistance, and those transitioning from public assistance obtain child care so parents can work or attend education/training programs (US DHHS-CCDF).

Like many other public benefits, qualification for child care subsidies is based on income. The federal income threshold is set at or below 85% of state median income, but states can set lower thresholds (US DHHS-CCDF). More than two-thirds of states have child care subsidy eligibility limits under 200% FPL (NCCP-Fass 2008), which is $48,600 for a family of four in 2015 (US DHHS-Poverty). States with more stringent Temporary Assistance for Needy Families (TANF) work requirements often have lower income eligibility limits and less generous child care subsidies than states with less stringent work requirements (Ha Y, Ybarra M. Are strong work-first welfare policies aligned with generous child care provisions? What states are doing and the implications for social work. Families in Society. 2013;94(1):5-13.Link to original source (journal subscription may be required for access)Ha 2013).

Implementation Resources

NCSL-CCEELD - National Conference of State Legislatures (NCSL). Child care and early education legislation database.

Citations - Evidence

* Journal subscription may be required for access.

Kimmel 1995* - Kimmel J. The effectiveness of child-care subsidies in encouraging the welfare-to-work transition of low-income single mothers. American Economic Review. 1995;85(2):271-5.

Michalopolous 2010 - Michalopoulos C, Lundquist E, Castells N. The effects of child care subsidies for moderate-income families in Cook County, Illinois: Final report. Washington, DC: Office of Planning, Research and Evaluation (OPRE), Administration for Children and Families (ACF), US Department of Health and Human Services (US DHHS); 2010.

NCCP-Schaefer 2006 - Schaefer SA, Kreader JL, Collins AM, Lawrence S. Parent employment and the use of child care subsidies. New York: National Center for Children in Poverty (NCCP); 2006.

Citations - Implementation Examples

* Journal subscription may be required for access.

NCCP-Fass 2008 - Fass S, Briggs J, Cauthen NK. Staying afloat in tough times: What states are and aren’t doing to promote family economic security. New York: National Center for Children in Poverty (NCCP); 2008.

US DHHS-Poverty - Office of the Assistant Secretary for Planning and Evaluation (ASPE). 2012 HHS poverty guidelines: One version of the [US] federal poverty measure. US Department of Health and Human Services (US DHHS).

US DHHS-CCDF - US Department of Health and Human Services (US DHHS): Office of Child Care: An Office of the Administration for Children & Families (OCC). Child Care and Development Fund (CCDF) re-authorization frequently asked questions.

Ha 2013* - Ha Y, Ybarra M. Are strong work-first welfare policies aligned with generous child care provisions? What states are doing and the implications for social work. Families in Society. 2013;94(1):5-13.

Date Last Updated

Mar 11, 2015

Scientifically Supported: Strategies with this rating are most likely to make a difference. These strategies have been tested in many robust studies with consistently positive results.

Some Evidence: Strategies with this rating are likely to work, but further research is needed to confirm effects. These strategies have been tested more than once and results trend positive overall.

Expert Opinion: Strategies with this rating are recommended by credible, impartial experts but have limited research documenting effects; further research, often with stronger designs, is needed to confirm effects.

Insufficient Evidence: Strategies with this rating have limited research documenting effects. These strategies need further research, often with stronger designs, to confirm effects.

Mixed Evidence: Strategies with this rating have been tested more than once and results are inconsistent or trend negative; further research is needed to confirm effects.

Evidence of Ineffectiveness: Strategies with this rating are not good investments. These strategies have been tested in many robust studies with consistently negative and sometimes harmful results.